Does Saab deserve to survive? – Fleet Voice
Wednesday 21 September 2011. Fleet Voice Column.
You can’t help but feel sorry for Saab. Like some wounded elk stumbling through the forest, the Swedish car maker has lurched from one crisis to the next since being sold off by General Motors at the beginning of 2010.
Where once there was bullish optimism and a new 9-5 model launch, now there is despair and the imminent threat of bankruptcy. Amid all of the wheeling dealing to keep the company afloat, we must ask ourselves: does Saab deserve to survive?
Unlike so many of the banks that found themselves severely short of funds yet were deemed to big to fail, Saab is in the precarious position of being too small to succeed. It’s reckoned by industry experts that Saab would need to shift a minimum of 120,000 cars per year to be a viable business.
Other experts and analysts within the motor industry say Saab would really need to sell 200,000 every year to turn a profit and remain a player in the car world. To put this in perspective, Audi sells more than 100,000 per cars year in the UK alone.
Ignominy
Workers at Saab must be looking to their Swedish counterparts at Volvo with considerable envy.
Volvo has struck a successful deal with Chinese firm Geely after Ford tired of financial losses, and Volvo hasn’t looked back since. It recorded sales of 373,525 cars in 2010, which is 11.2% up on 2009’s figures, and Volvo has launched or updated several models that appeal to both traditional buyers of its cars and new customers.
Looking at Saab’s line-up compared to Volvo’s shows where much of the rot set in for Sweden’s other car maker. A basic two-model range just isn’t enough, even if the 9-3 has spawned estate, convertible and pseudo-SUV versions. The previous 9-5 may have been dated but it was a sturdy old companion, a bit like a Labrador moving into its dotage.
The new 9-5 that was launched last October simply felt outdated and underdeveloped. It was clear General Motors (GM) had not bothered with this model towards the end of its custodianship of Saab, and the evidence was all too clear in the car’s dynamic performance, or lack of it. Even an early re-fettle of the new 9-5’s suspension has done little to bolster the model in the face of brilliant opposition from Audi, BMW, Jaguar and Mercedes.
Saab cannot even rely on the traditional tranche of buyers who have revelled in the cars’ quirky design traits. Most of these traits were engineered out by the soulless GM bean counters while the ever widening gap between the driving manners of Saab cars and its rivals became too great for most buyers to ignore.
On top of this, Saab was put through the embarrassment of launching the Subaru Impreza-based 9-2X and the truly appalling 9-7X in the USA. This was the cretinous brainstorm of GM to increase sales in the USA, but it backfired as Saab buyers State-side immediately saw through the sham.
Such ignominy at the hands of GM should have been put behind Saab when it was sold off and Spyker took charge. Now called Swedish Automobile, or SWAN, Saab’s new boss Victor Muller was in extremely positive mood at the start.
Now, even Muller has the air of a man who knows the end is nigh and there’s very little he can do to influence the outcome. A lack of presence at the huge Frankfurt motor show last week only served to emphasise Saab’s woes. It claimed to have aborted plans to be at the show to save cash, but the truth appears that Saab just didn’t have the money to be there in the first place.
With mounting debts to workers for unpaid salaries and bills not being settled with parts suppliers, Saab is in the worst position of all. It needs components and people to build cars, but it cannot afford to pay for either.
Assurances
Saab in the UK has assured customers that production will begin again and anyone who has placed an order for a car will have it honoured. Charles Toosey [pictured], Managing Director of Saab UK, said in a statement: “Plans to restart production remain in progress but as yet with no confirmed date.”
Toosey went on to add: “I would like to express my deep gratitude to all our customers who have been so patient and understanding in the past trying months.
“With plans to revitalise the future product range and reshape the business into a leaner and competitive organisation, we are sure Saab will emerge stronger.”
Brave words, but they have an irredeemable feel of the inevitable. In the same statement, Toosey also reassures British Saab customers the UK arm of Saab is not part of SWAN and not subject to its parent company’s slide towards bankruptcy.
This is a moot point because the reality is Saab’s British business becomes pointless if there are no new cars coming from the factory to sell in its showrooms. Hundreds of jobs will be lost in the UK should Saab fail, not to mention the 3,700-strong workforce at the factory in Trollhatten, Sweden. Then there are those jobs that will be lost in the supply chain.
Rover reprise
It’s very sad and, on a human level, Saab’s continued survival would help secure many jobs. However, as we saw with our very own and very British debacle when Rover was sold off by BMW with a £1 billion dowry, small car companies with outdated model ranges cannot survive.
It didn’t help Rover’s cause that it was sold off to a group who turned out to be more interested in lining their own pockets than building a future for car manufacturing in the UK. Abortive moves into building a flawed supercar, a wasteful Formula One engine project and, perhaps the biggest wasted opportunity, the truly dire City Rover all conspired to see Rover dead and buried as a viable British company.
Then there was a Government at the time which decided to intervene despite knowing nothing about the auto industry. Blair, Mandelson et al were only interested in securing votes for an upcoming election and handed over millions of pounds with no securities or guarantees about how that money would be spent.
Perhaps the only solace Saab will find should the inevitable happen, and it seems likely it will be declared bankrupt, is the Swedish firm was not subjected to the mismanagement that killed Rover. Victor Muller has worked tirelessly to secure Saab’s future, but a reluctant Chinese government is increasingly opposed to deals with foreign companies.
Certainly, there will be recriminations and blame bandied about if Saab hits the buffers as this is inescapable with the failure of any business. We can only hope the company staggers on long enough for many of the workforce to find alternative employment.
Unfortunately, the wounded elk of Saab is about to find out just how harsh the winter can be.
Alisdair Suttie
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4 Comments
Too bad this is bs speculation. Saab has been granted reorganization by the Swedish court.
brian
September 21, 2011, 11:34 am.
BMW killed MG Rover, and GM killed Saab. End of.
RayCee
September 22, 2011, 1:55 am.
Rover was in a relatively healthy position when BMW sold it off, despite its cavernous losses. BMW was happy to sell the company for £10 and gift the Phoenix philanderers a £1 billion kitty. They then spent the next few years wasting this money on pointless projects – did anyone need a V8-engined rear-wheel drive MG ZT? Instead of concentrating on a core business, Phoenix guaranteed the failure of Rover and the then Labour government were happy to fiddle while it burned.
As for Saab’s reorganization, this is merely a stay of execution. Muller and his team must still find backing from the Chinese, which looks very unlikely as the Chinese government is now very opposed to this kind of deal. Saab has no guarantees and, even if it does land a deal with a Chinese investor, it still has to be approved by the European Investment Bank, which is also believed to be very frosty in its view of any such deal.
Given that two of Sweden’s largest unions now want the company declared bankrupt to protect its members’ wages, the outlook continues to look extremely bleak for Saab. Sad, but the reailty is Saab has not been selling sufficient numbers of cars to be a viable business for a very long time and even a last minute Chinese deal is highly unlikely to generate enough sales to keep the company afloat.
Alisdair Suttie
September 22, 2011, 8:49 am.
As a Saab enthusiast with 3 swedish classics – 30 year old 99, 16 year old 900 convertible and 2003 9-3 Aero – it is with regret that I suggest Saab are not being honest and open with current and potential customers. I waited over 2 months for a replacement key, only to be then told it is not the key, it’s the sim unit, which there is no sign of after a further 3 months – 5 months off the road, costing me serious financial hardship. There is no sign my vehicle will be on the road this year! How can Saab sell new and used vehicles when they are aware that “back order” status applies on their car parts. The “great unwashed public” like me could buy a £20,000 plus vehicle one day and it could be off the road indefinitely the next! Having tried to speak to the head of Saab in the UK and failed, it is galling to see this article does not touch on what is a major issue
at this point in time – NO PARTS for Saab users and potential customers!
john bunyan
October 18, 2011, 9:36 am.
